Federal Reserve vice chairman for supervision, Randal Quarles, warns cryptocurrencies like bitcoin may pose a “large challenge for the system.”
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“Risk management can act as a mitigant, but if the central asset in a payment system cannot be predictably redeemed for the U.S. dollar at a stable exchange rate in times of adversity, the resulting price risk and potential liquidity and credit risk pose a large challenge for the system,” said Quarles.
He advises any central bank to do “extensive reviews and consultations” before distributing its own centralized cryptocurrency, particularly in countries where cash is significantly prominent.
Quarles finished by recommending that supplementary research into the technology to establish use cases.